Supreme Court: doctor must repay residency stipend to hospital in proportion to time not worked

The Civil Cases Department of the Senate, part of Latvia's Supreme Court, has examined a cassation appeal in a case in which a regional hospital sought repayment of a residency stipend from a doctor. The Senate overturned the Riga Regional Court's judgment in the part concerning the stipend and statutory interest, and sent the case back to the regional court for a new hearing. The Senate told the portal Delfi about the decision. The ruling matters because it clarifies whether stipend agreements between regional hospitals and medical residents are valid, and to what extent they can be enforced.

Background

The hospital had signed a stipend agreement with a doctor who began working at the hospital while also pursuing residency studies. The hospital undertook to pay a monthly stipend and to guarantee a job after her studies. The resident undertook to study successfully and continuously and, after graduating, to work at the hospital for at least five years, or otherwise reimburse all expenses at double the amount.

The employment relationship ended early because the doctor herself gave notice. The hospital then sued for double the stipend amount paid, plus late-payment interest.

Lower court rulings

The Riga City Court partly upheld the claim and ordered the doctor to repay part of the stipend. The Riga Regional Court rejected the hospital's appeal. It considered the arrangement to be training within the meaning of the Labour Law, where the period may not exceed two years, so the doctor would only have to repay the stipend for the gap between that period and the time actually worked. The court found the contractual penalty clause contrary to the Labour Law.

The Senate's assessment

The Senate stated that residency is not professional training or qualification upgrading, to which those Labour Law limits apply. Residency is an essential part of a doctor's education, and without it a person cannot obtain a medical certificate. A stipend agreement motivates residents to work at the hospital for a set period, helping keep healthcare services available in the region. The Court of Justice of the European Union has also recognised the legitimate aim of such an obligation. The hospital is therefore entitled to claim repayment of the stipend, reduced in proportion to the time worked.

On statutory interest, the Senate found that the regional court had not adequately considered whether the doctor could have had grounds to doubt her obligation. Her position conflicts with Senate case law that was published while the parties were still employed. On the penalty clause, however, the appeal court was correct: the law gives employers no right to penalise an employee with a contractual penalty for resigning.